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In certain jurisdictions, the defendant in a patent infringement lawsuit can raise an objection of invalidity to be jointly decided by the same court. In other systems, the validity of the patent must be challenged in a separate, independent proceeding, filed before a different court. This so-called “bifurcated system” is adopted, for instance, in Germany, where infringement is decided by the regional courts (Landgerichte), while validity falls under the jurisdiction of the federal patent court (Bundespatentgericht).
Introduction
In certain jurisdictions, the defendant in a patent infringement lawsuit can raise an objection of invalidity to be jointly decided by the same court. In other systems, the validity of the patent must be challenged in a separate, independent proceeding, filed before a different court. This so-called “bifurcated system” is adopted, for instance, in Germany, where infringement is decided by the regional courts (Landgerichte), while validity falls under the jurisdiction of the federal patent court (Bundespatentgericht).
On this topic, Brazil can be considered a peculiar case. While there are those who say the Brazilian system of patent litigation is also bifurcated, it would be more accurate to qualify it as a “mixed system”. Patent validity is always tried by federal courts, whereas infringement lawsuits most of the times are filed before state courts. However, depending on who the defendants are, they can also be filed before a federal court. Jurisdiction in Brazil is, after all, personal – lawsuits against federal government entities belong to the federal courts, whereas those involving solely private entities must be tried by the state courts.
Because patent infringement lawsuits filed in the country usually do not concern federal government entities, most – if not all – of them could only be found, until recently, in state courts. This created, at least in practice, a bifurcated system wherein enforcement was pursued before state courts whilst validity was decided by a federal judge. A system, incidentally, that faced several of the same issues found in other countries that adopt a “pure” bifurcated system – for example, the challenge posed by enforcement proceedings that reach an end while the discussion over the patent validity is still ongoing.
Consequently, over the past years, there have been several attempts by litigators to come up with new, creative ways to work this system to their advantage. On their side, judges have also had their impact on the way federal and state courts interact when it comes to the enforcement and review of patents.
The purpose of this Article is to present two recent trends that are reshaping the Brazilian system of patent litigation. First, there is the sending of infringement lawsuits originally filed before a state court to the federal courts after the federal government requested to intervene as an assistant to the defendant (i.e. the alleged infringer). Second, there is the “battle of injunctions” – when a federal judge grants a preliminary injunction (PI) to stay a patent citing, as reasoning, the PI previously granted by the state judge in an infringement proceeding.
Patent infringement before the federal courts
In a series of ongoing infringement lawsuits in Brazil, seeking enforcement of pharmaceutical patents against private companies that had offered for sale biosimilars drugs, the Brazilian federal government filed requests to intervene as assistant to the defendants. Under the local rules of civil procedure, when a federal entity submits such request, the dockets of the case shall be remitted from the state court to the federal courts to analyze and render a decision admitting or rejecting the intervention.
Thus far, said intervention has been allowed in one of the referred cases. And as the defendant had already presented, in their answer to the infringement complaint, a defense of patent invalidity, both infringement and validity of the patent should be decided by the same judge. There is still a chance, though, that the Court of Appeals for the 2nd Circuit, where an interlocutory appeal regarding the federal government’s intervention is pending, may result in the return of the process to the state court.
It is thus still too early to say if what happened in this case will become the new norm for patent litigation in Brazil, or if they will remain as an exception to the bifurcated rule. Due to the universal public health system in place in the country (Sistema Único de Saúde – SUS) that encompasses the supply of medicines, several patent infringement cases refer to acts of offer for sale and sale of infringing drugs within the context of public procurement of medicines by the Ministry of Health. Not to mention the acts of offer for sale and sale practiced as part of the government’s program for development of drugs and transfer of technology in partnership with private local companies (the Parcerias para o Desenvolvimento Produtivo – PDPs). These could justify future interventions by the federal government in patent infringement lawsuits, taking them away from the state courts and to the federal courts.
Battle of injunctions: federal versus state judges
The statutory requirements provided by the Brazilian Code of Civil Procedure for the granting of a preliminary injunction are the same for infringement and validity proceedings: the plaintiff must prove, based on prima facie evidence, a likelihood of prevailing on the merits, and that there is a risk of harm if the injunction is not granted. Additionally, the effects of the decision that grants the PI cannot be irreversible.
Recently, two judges sitting at the federal courts in Rio de Janeiro specialized in patent law rendered decisions justifying the grant of preliminary injunctions in invalidity lawsuits on the risk of harm for the plaintiff against whom an injunction had been rendered in an infringement proceeding.
These decisions, which are still being discussed in appeals and, as such, may be reverted, may as well provide an indication that federal judges, even when not directly responsible for the handling of infringement cases, could have an impact the enforcement of the patent. It will remain to be seen how the interaction between federal and state judges will be affected by this new trend.
Conclusion
There is no such thing as a perfect model of patent litigation. Having infringement and validity being handled by the same court in a unified proceeding can present its own disadvantages in terms of the duration of the process and mixing of different subjects. A bifurcated system, on the other hand, can result in the enforcement of ‘invalid patents’, if the proceedings do not run in parallel. A stay of infringement whilst invalidity is being discussed could be an answer, but it would not be a satisfactory one, as it can impose an undue burden of the patent owner that already waited a long time to have the patent granted (not to mention the potential of this mechanism being abused by infringers in bad-faith).
Brazil is clearly still trying to figure out what works best in a country whose patent office is known for its unreasonable delays in patent prosecution, and where infringement – especially, but not only, of pharmaceutical patents – is a concern. The strategies developed to deal with the problems posed by the system may not always land the expected results, but they show a willingness to improve.
Written by Liliane Roriz (Appellate Judge Liliane Roriz (ret.), partner) and Tatiana Machado (partner)